Effective August 1, 2004, the State of New Jersey implemented a mandatory withholding tax on the sale of New Jersey property owned by non-residents of New Jersey. Initially, there was no exemption for non-resident sellers completing a 1031 tax-deferred exchange and closing agents were required to withhold 2% of the gross sale price at closing.

Effective October 8, 2004, an exemption is now available for sellers completing a 1031 exchange. To request the exemption, a seller/exchanger must complete a Seller’s Residency Certification/Exemption form and check box “7” of the form and circle 1031 as the reason for the requested exemption.